Jerry Kopel


Congratulations to the all Colorado farm equipment dealers, their lobbyists, and their Senate Bill 18 spear carriers, Sen. Don Ament (R) and Rep. "Bud" Moellenberg (R).

The dealers can relax and toast themselves with champagne, knowing their blood kin and related-by-marriage families will never have to worry about "the next paycheck". From now until the world ends, farm equipment dealer franchise contracts with suppliers will continue as long as dealers (and their franchise heirs) don't do anything stupid, such as file bankruptcy or commit a felony.

"Contract until the world ends"? Under SB 18, a supplier can't "fail to renew" a contract "without cause". If the supplier has cause, the dealer has six months "to cure any claimed deficiency".

Of course, what constitutes "cure" will be by a court decision, especially if dealer and supplier don't even agree on how to interpret the statutory list of "causes". And every court dispute under this new law remains in Colorado, and not the supplier's home state, because the new law says so.

"Contract until the world ends" isn't the only benefit in this seventeen-page law. Other items any dealer would want are also there, such as: No "unique" supplemental impositions, getting deliveries on time, no price discrimination, the right to transfer minority interests in the business without supplier's consent, and a damages section that spells out ONLY the rights of the dealers.

The Ament-Moellenberg bill is probably the first time the legislature has taken a business contract written by one party in a two-party situation, and actually made it a law on the statute books.

And what is even more disconcerting was the decision made by Gov. Romer in regard to SB 18. On May 2d, Romer informed the state senate: "As of this date, I have neither signed nor vetoed SB 18 `Concerning Trade Practices in the Farm Equipment Industry'. Therefore, according to state law, the bill becomes law without my signature at 12:01 a.m., May 2, 1995.

Not that the Romer decision was unexpected. Despite heavy lobbying by some (not all) of the legislative Democratic leadership to veto the bill, Romer informed them early and often that he would not.

The Romer position was a far cry from the one he took on a similar law in 1991 when beer wholesalers decided they wanted an iron-clad franchise agreement with wholesalers that would last until the world ends, and they got the legislature to pass their bill.

In reponse, Romer struck straight and hard at the Republican psyche, using every phrase but "hypocrite" in his veto message which you can find in the House Journal of April, 15, 1991:

"I feel obliged to defend Adam Smith and the free market economy. One of the strengths of this nation has been its willingness to allow the free market economy to create new products and new wealth, and to share it broadly without excessive government interference. When government is needed to protect public health or the consumer, I believe it should act with prudence and caution.

"I have vetoed this bill because it is an unwarranted intrusion by government into contractual relationships between beer suppliers and distributors. I believe that we can have orderly relationships within the beer industry without the government dictating terms of contracts. In addition, this bill would set a precedent that would invite other businesses to seek government protection and intervention in their franchise relationships.

"Many individuals within this state have said in various ways that there is too much government intrusion in our lives. As a Democrat, I hear that point of view and am responsive to it. In my opinion, this bill does not represent a wise or necessary intervention, and for that reason, I have vetoed it."

So why did Governor Romer suddenly change his philosophy? Why did Governor Romer not veto SB 18? Why did he provide no explanation in his report to the Senate as to why he was not signing the measure?

There is quite a difference between a governor "not signing a bill" and a legislator "abstaining from voting". Article V, Section 43 of the state constitution tells a legislator: "A member who has a personal or private interest in any measure or bill...shall disclose the fact to the house of which he is a member, and shall not vote thereon". Not voting is the same as a "no" vote, since the affirmative side needs a majority of the members elected to pass a bill on third reading.

For the governor, "not signing" is the same as signing because the bill becomes law ten days after he receives it and fails to sign, under Article IV, Section 11. And that is true even if the governor has a "personal or private interest in any measure" which Gov. Romer certainly has in SB 18. Most of Romer's multi-million dollar fortune comes from past and present farm equipment dealerships.

While SB 18 had an easy time in its original passage in the Senate (only Ray Powers (R) voted "no"), the measure ran into difficulty in the House, with Rep. Moellenberg delaying final passage to round up needed votes. Final vote was 37 to 28, with six of the seven in House leadership voting "no".

House Republicans voted 22 to 19 to kill the bill. They were: Adkins, Agler, Berry, Congrove, Dean, Faatz, Foster, Grampsas. Jerke, Kreutz, Lamborn, Lawrence, McElhany, McPherson, Morrison, Pankey, Paschall, Pfiffner, Prinzler, Schauer, Sullivant, Tucker.

House Democrats voted 18 to 6 to pass the bill. Votes to kill the measure were by DeGette, Friednash, Gordon, Kerns, Saliman, and Snyder.

For House Democrats SB 18 turns into a win-win situation. They now have an issue against nineteen Republican incumbents who voted "yes". Let any of those nineteen talk about or print platitudes regarding "competition", "free enterprise" and "reducing regulation" and their 1996 Democrat challengers will bring up SB 18 and shove it down their respective throats. After all, none of the Democrat challengers will have voted in favor of SB 18.

To sum up: Farm equipment dealers are in clover. Romer gets to make more money. Democrats get a campaign issue, or at least squelch "certain" Republican platitudes. And the "barrier" is broken.

But SB 18 wasn't the only bill to break the barrier. Remember the beer wholesalers and the 1991 Romer veto message quoted earlier? Well, in 1995 HB 1198 by Rep. Jack Taylor (R) and Sen. Dave Wattenberg (R) gave beer wholesalers exclusive territory for all the manufacturer's products.

Liquor wholesalers get a "written contract...that designates the specific products of the brewer to be sold..." and gives the wholesaler an exclusive territory. While this is less than they sought in 1991, the issue was the same as mentioned earlier in the 1991 Romer veto:

"I have vetoed this bill because it is an unwarranted intrusion by government into contractual relationships...we can have orderly relationships within the beer industry without the government dictating terms of contracts."

However, on March 24, Romer issued the same I-have-neither-signed-nor-vetoed message on HB 1198 that he did on SB 18. The only difference is, as far as I can determine, that none of the Romer fortune came from beer distributorships.

Franchise contracts written into law didn't happen in the 1970s for independent gasoline station owners, or in 1991 for beer wholesalers, but the next bill in 1996 could guarantee Colorado car dealership franchise contracts until the world ends, sponsored of course, by two "conservative" Republicans, and followed by a I-have-neither-signed-nor-vetoed message from Gov. Romer.

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